This post was originally published on Forbes Jun 18, 2015
Joan Farr tells me that the IRS denial of exempt status to the Association For Honest Attorneys is another instance of an organization being persecuted because it is Christian and conservative. I contacted Ms. Farr, because I was pretty sure that PLR 201524206, a revocation of exempt status, was referring to A.H.A.!. (On the A.H.A.! website she is listed as Joan Heffington, which is the name she used while running for Governor of Kansas in the 2010 Republican primary. In her 2014 run for the Senate as an independent she went by Joan Farr. Ms. Farr is a widow and Farr was her maiden name which she has readopted.) Ms. Farr confirmed that A.H.A.! was the organization in the ruling.
About the Association for Honest Attorneys
The story goes that Diogenes walked about Athens with a lamp lit in the daytime saying he was searching for an honest man. There does not appear to be any account of him being successful, but I have not really looked that hard.
When Joan Farr founded the Association For Honest Attorneys, she was hoping to be able to build a list of honest attorneys. She has not had a lot of luck. The website has a tab titled "Lawyers to Avoid/Consider". The avoid list is pretty long, I did not have the patience to count, but there must be more than 100 on the list - mostly from Kansas, but a scattering from other states including New Jersey, California, Texas and New Hampshire. New Hampshire! What would Daniel Webster think?
The list of attorney to consider is much - 100% - shorter.
We have removed the names of attorneys that we had on this list, because there are NO honest attorneys in America. Not one lawyer has joined our organization since we began in 2003, and this speaks volumes. However, if you would like a referral to a lawyer in the Wichita area that we feel you can trust, please send an e-mail request to firstname.lastname@example.org. We will be glad to assist you.
There is of course more to AHA than the lists. According to the PLR
Based on the determination application and its Articles of Incorporation, the organization purposes are: a) To discourage civil litigation b) To increase public awareness of the illegal and unethical practices of many attorneys c) To reduce stress and save people money d) To keep attorneys honest e) To gain respect for the legal profession f) To improve the legal system in America g) To seek "justice for all" h) To cooperate with all public, private, religious agencies and professional groups in the furtherance of these ends i) To financially support and promote the common cause j) To solicit and receive fund for the accomplishment of the above purposes.
According to the website
We strive to help people reduce stress and save money in any legal matter through alternative means of resolving issues, rather than lawsuits. In addition to referrals, we offer assistance with attorney adfficulties, education regarding the legal system, and a quick resolution of your legal matters. The A.H.A! operates from donations which are used to increase public awareness through mass mailings and the news media in an effort to discourage litigation, especially suits which are frivolous. "All donations are 100% tax deductible." We offer assistance to those members who suspect ethical violations involving attorneys, and welcome membership by those attorneys who are committed to our goals and the good of mankind. We encourage everyone to do business with attorneys who are members of the A.H.A! As an example, attorney members must vow not to drag legal matters out needlessly, refuse to allow or engage in intentional emotional distress or harassment of clients and/or witnesses, and to be loyal to truth and justice above money.
Of course that "100% tax deductible" part is what is at issue now with the exempt status.
Ms. Farr indicates the "facts" in the ruling are inaccurate. Here is the IRS version. The agent determined that some of the services that AHA provided for compensation were not related to its exempt purpose and should have been taxed as UBTI.
The agent found many transactions for personal expenses and at least one instance of an expenditure related to the campaign for governor.
During the review of the bank statements, the agent found a check written to "cash". The memo section the check reflected "cash for campaign". The agent asked to provide the exempt purpose of this payment. said this check was for repayment of the loan.
So you have UBTI, inurement and political activity. Other than that Mrs. Lincoln how did you enjoy the play?
Ms. Farr had loaned the organization a lot of money, so any expenditures not related to the exempt purpose were actually loan repayments. This ended up leading to an attempt to reconstruct the loan balance, which took a lot of effort on Ms. Farr's part, but ended up not satisfying the IRS.
Ms. Farr indicated that AHA had never grossed more than $25,000 meaning it never had to file a complete Form 990. Based on the drama about the loan balance, it was clear that nobody was maintaining a general ledger. Revenue agents are trained as accountants and it makes accountants happy when they have a general ledger with everything classified. I also have to say that having an entity pay back your loan by paying your bills for you is a very bad idea. If there had been a general ledger with those items charged to the officer loan accountant that would have been better, but much better would be the two step process of a loan repayment via a check to Ms. Farr and her paying the bills out of her personal account.
I can't rule out that the selection of her organization for audit had something sinister behind it, but having spoken to her a bit, I could understand how she might exhaust the patience of a revenue agent. Inserting an accountant between her and the IRS might have saved the day. On the other hand you have to wonder why this organization would be a priority with the IRS.
More To Come
Ms. Farr will be litigating the revocation in Tax Court, pro se, of course. The government tried to get her petition knocked out, but the Tax Court will be allowing the case to go forward. Ms. Farr has a book Ten Secrets You Must Know Before Hiring An Attorney that I have ordered and may review. Also she has been involved in some fascinating pro se litigation including a lawsuit against the Department of Defense for getting her father killed in Vietnam.
I have to say that Ms. Farr reminds me of Kent Hovind, based on her views on many issues and her sense of there being many conspiracies. She had not heard of Kent's travails, but she has now. There is plenty about Ms. Farr on youtube. Here is a sample of one of her interviews.
Kent Hovind Update
I was pleased to learn that Kent Hovind is no longer being held in solitary confinement and that he now has a date to commence home confinement - July 8.